The True Story of Cheng Yi Pharmaceutical from Running a Pharmacy with Two Large Tanks to Landing on the Shanghai Stock Exchange

On April 13th, Zhejiang Cheng Yi Pharmaceutical Co., Ltd. (hereinafter referred to as "Cheng Yi Pharmaceutical") issued a notice about passing FDA certification, revealing that the enterprise underwent a comprehensive cGMP on-site inspection from FDA on July 12-15, 2016, and recently received a written notice and accompanying verification report from FDA, passing FDA certification.

This certification involves the Ribavirin production line and Azathioprine production line of Cheng Yi Pharmaceutical. In other words, it will have a positive impact on Cheng Yi Pharmaceutical's expansion of the global API market.

In fact, welcoming audits from foreign drug regulatory agencies is already the norm for Cheng Yi Pharmaceutical. Since 1998, the company has continuously passed the GMP audit of TGA in Australia; In 2010, it successfully passed the international GMP joint audit conducted by Australia's TGA, the US FDA, the EU's EMEA, and Singapore's HAS; In 2014, Cheng Yi Pharmaceutical passed on-site audits by the German drug regulatory department and the US FDA. As disclosed in the previous announcement, it is the third time that Cheng Yi Pharmaceutical has passed FDA certification. Nowadays, Cheng Yi Pharmaceutical's main export products have registered DMF files and CEP certificates in the US and EU regulatory markets.

Where will the triple identity of island enterprises that have crossed the threshold of 50 years, listed companies that have landed on the main board of the Shanghai Stock Exchange, and important raw material drug suppliers in the global pharmaceutical industry lead enterprises? With this question in mind, a reporter from the Medical Economic Daily once again walked into Zhejiang Cheng Yi Pharmaceutical and listened to its leader, Chairman Yan Yiyi, share his blueprint in his heart.

Yan Yiyi, Chairman of Zhejiang Chengyi Pharmaceutical

The next 50 years are coming

At 7:30 in the morning, Yan Yiyi, who was jokingly referred to by the employees as "working 360 days out of 365 days," returned to the office of the Chairman of Cheng Yi Pharmaceutical as usual early and neatly stacked the files and materials on the desktop, continuously recording the day's work in her work notebook. It has been a natural work habit that he has developed for decades to finish things on the same day. When his fingertips touched the recorded materials of the "Zhejiang Marine Biomedical Forum and Cheng Yi Pharmaceutical 50th Anniversary Celebration Conference" that he brought in the day before the office, he couldn't help but stop. Yan Yiyi's memory instantly returned to the lively and exciting moment a few months ago: the figure of employees working overtime and rehearsing independently during the preparation period, the lively group photo under the 50th anniversary commemoration mark, the dedicated, nervous and excited "Song of Sincerity" choir listening to experts sharing on the day of the conference... Fifty years of ups and downs, fifty years of spring and autumn. The entire celebration event showcases Cheng Yi Pharmaceutical's exploration and enterprising spirit of adapting to the trend of the times, adhering to the spirit of pragmatism, pursuing excellent quality, and achieving transformation and upgrading through continuous transformation for half a century. The conference not only invited Yang Huanming, academician of the Chinese Academy of Sciences, Tao Jianhong, chief editor of the Medical Economy Daily, Yu Guangli, president of Ocean University of China, Chen Shifei, deputy director of the Food and Drug Administration of Zhejiang Province, and other experts and scholars to make wonderful reports on gene and Drug design, marine medicine resource development, and drug economy development trend analysis, but also invited the China Opera and Dance Theater to perform two large-scale performances of Blessings from the Horizon, The second performance offered condolences to the soldiers stationed on the island, the female militia company, the family members of employees, and the neighbors, with a lively and lively atmosphere.

The True Story of Cheng Yi Pharmaceutical from Running a Pharmacy with Two Large Tanks to Landing on the Shanghai Stock Exchange.

Unconsciously, I have been in the factory for almost 50 years, "Yan Yi eagerly flipped through the materials. New materials and old photos suddenly reminded him of himself more than 40 years ago: at that time, Yan Yiyi was just an ordinary technician, earning less than half of the salary of others, but always worked overtime on his own every day until the factory was shut down at 21:30 in the evening - in order to learn more and more professional knowledge. This island, 33 nautical miles away from Wenzhou, is always very quiet at night. After work every day, the pure white moonlight and the old flashlight illuminate Yan Yiyi's way home. The salty sea breeze seeped into the tip of his nose, mixed with the scent of green grass, always making him indulge in reminiscing about the information he had just read.

Xu was rewarded for his diligence, and Yan Yiyi and Cheng Yi Pharmaceutical together hit an important turning point in the late 1970s - the Tongshan Pharmaceutical Factory (the predecessor of Cheng Yi Pharmaceutical) was insolvent and on the brink of bankruptcy due to various reasons. Yan Yiyi took orders in the face of danger and turned the tide, achieving a "miracle" of generating a profit of 1000 yuan the following year, reversing the situation of three consecutive years of losses.

From a data perspective, since Yan Yiyi took the helm in 1980, the operating efficiency of the enterprise has maintained a growth trend. But this is not because the development of the enterprise has been smooth sailing, but precisely because the crises and obstacles encountered along the way have urged Yan Yiyi to lead Cheng Yi Pharmaceutical to constantly break through difficulties and achieve a spiral upward trend. Yan Yiyi's motto, which has been spoken and practiced for many years, is "no falsification in production and operation, no falsification in enterprise performance, no falsification in product quality, and no falsification in environmental governance".

In fact, the multiple technological advancements experienced by Cheng Yi Pharmaceutical during its development are closely related to Yan Yiyi. In 1988, enterprises still under collective ownership needed funds to build injection workshops. Yan Yiyi used mortgages and loans from banks to support the innovation of the enterprise's production line, and achieved a sharp increase in the annual production of injection products from 10 million units to nearly 100 million units; Then Ribavirin API was "found" to replace amalgam red, and it was profitable in the year when it was put into production, which was also Yan Yiyi's "idea" when visiting a pharmacy in Shanghai on a business trip; In 1991, under the auspices of Yan Yiyi, the enterprise invested 8.4 million yuan to research and develop a new generation of synthetic high efficiency and low toxicity nucleoside antiviral drug - Ribavirin, and built the production workshop and supporting facilities for this product; In 2005, Cheng Yi Pharmaceutical began investing 30 million yuan to build the "Three Waste Treatment Center" for environmental protection public projects, embarking on the path of comprehensive transformation.

Forced to withdraw from the past memory, Yan Yiyi stood up and looked at the Ribavirin API workshop 10 meters away from the window, thinking again about the working mode.

Turning around, I caught a glimpse of the newly added decorations in the office more than a month ago: a scaled down version of the listed gong souvenir presented by the Shanghai Stock Exchange, which also bears the date of Cheng Yi Pharmaceutical's official launch on the motherboard - March 15, 2017. Yan Yiyi put away her overflowing smile and habitually tightened her face. She pursed her lips and returned to her desk, contemplating the three planning drawings lying flat on the table - this is the fifth major technological transformation that Cheng Yi Pharmaceutical is about to embark on, and one of the main purposes of raising funds for this landing on the Shanghai Stock Exchange's main board is the technical renovation project of the pharmaceutical building.

The True Story of Cheng Yi Pharmaceutical from Running a Pharmacy with Two Large Tanks to Landing on the Shanghai Stock Exchange.

If the transformation can be successfully completed, the capacity of Cheng Yi Pharmaceutical's main products Glucosamine hydrochloride preparation and tolasemide preparation will be significantly improved. While expanding the production capacity of existing advantageous products, enterprises can also plan to produce some new potential pharmaceutical products with strong market demand, expand new dosage forms and specifications, which helps to further expand the market share of existing products and gradually form a multi-level and rich product structure.

Like the Divine 1.11

Looking at the reduced version of the gong presented by the Shanghai Stock Exchange, Yan Yiyi remembered the moment when the gong went public.

The stage wrapped in red carpet, the huge "603811" code on the background board, the wanton spray of fireworks on the edge of the stage, the employees holding up their mobile phones to take photos and their excited faces all remind Yan Yiyi that this pharmaceutical enterprise located in Dongtou Island, Wenzhou has finally officially landed on the main board of Shanghai Stock Exchange! As the controlling shareholder and actual controller of the issuer, Yan Yiyi has been accompanying this enterprise through the trough and challenging its own peak - becoming the first Dongtou and the 20th mainboard listed enterprise in Wenzhou, standing at a new starting point.

The True Story of Cheng Yi Pharmaceutical from Running a Pharmacy with Two Large Tanks to Landing on the Shanghai Stock Exchange

On January 11th, it was the day on which Cheng Yi Pharmaceutical successfully passed the review by the China Securities Regulatory Commission (CSRC); 1.11, coincidentally coinciding with the initial letter YYY of Yan Yiyi's name, added infinite imagination to the launch of Cheng Yi Pharmaceutical, as if there were gods in the dark.

The applause of flowers brought excitement, as well as the infinite glory of leading enterprises to land on the main board of the Shanghai Stock Exchange, but it is also a heavy corporate responsibility. The number of shareholders in the company suddenly increased from 28 to tens of thousands. As the actual controller of the company, Yan Yiyi once again calmed down the excitement brought by the company's listing and brought her ideas back to the company's development plan.

Since Cheng Yi Pharmaceutical successfully passed the review by the China Securities Regulatory Commission, Yan Yiyi's stay at the company has been further extended. After all, setting foot on the path of a public company, clear development plans, standardized finance and sales, sorting and updating products, and seeking government support are all indispensable.

The opportunity to go public provides Cheng Yi Pharmaceutical with greater space for marketing layout adjustment. One of the projects invested with raised funds, the "Marketing Network Construction Project", is undoubtedly a measure taken to address the "two vote system".

From a product structure perspective, Cheng Yi Pharmaceutical is mainly engaged in the research and development, production, and sales of chemical raw materials and formulations. In the past three years, the proportion of sales of its raw materials has shown a slow downward trend, dropping to 34.70% in 2016; In terms of preparations, the sales proportion of capsules has been increasing year by year, reaching 40.91% in 2016. In Yan Yiyi's view, Cheng Yi Pharmaceutical's leading products are in a highly competitive industry, with marketing models and methods, marketing networks and resources, marketing teams and management becoming the main content of the competition. At present, due to the failure to fully tap the market potential, the expansion of the national market is relatively limited, and the depth and breadth of the marketing network have restricted the sustained growth of the enterprise's sales scale. It can be said that building a nationwide marketing network is in line with the company's strategic development plan and will be one of the important ways for the company to maintain a leading position in the fierce market competition.

It is reported that Yan Yiyi is focusing on promoting and selling her own regional dealer network, further optimizing the existing company's regional dealer network, deepening and refining the distribution network layout, expanding sales coverage areas, and strengthening market promotion. At the same time, we will also integrate the resources of the original general distributor and encourage them to become the company's marketing and promotion service providers. The general distributor has shifted from being a direct customer of the company to providing market promotion services such as customer development, tracking, and maintenance to the company, in order to achieve a smooth transition from the main product distribution model to the "two ticket system" sales. Due to obtaining capital support for listing, Yan Yiyi is also considering complementing the advantages of pharmaceutical distribution companies and attempting to expand the company's distribution network through mergers and acquisitions.

If it can be smoothly implemented, there will undoubtedly be a significant increase in the asset size and business scale of Cheng Yi Pharmaceutical, and the depth and breadth of the marketing network will also be further optimized.

Focus on small goals and aim towards the big ocean

When asked about her goals after going public, Yan Yiyi thoughtfully said, "Before going public, Cheng Yi Pharmaceutical had cash dividends every year; after going public, we wouldn't stop paying dividends just because we went public. Dividends are also responsible to the majority of shareholders!" In his view, being responsible to shareholders means being responsible to the company, employees, and the government.

To achieve the "small goal" of dividends, choosing the correct development direction and improving strategic positioning for the enterprise has become one of Yan Yiyi's daily tasks.

As the saying goes, relying on mountains to eat mountains, relying on the sea to eat the sea. In recent years, marine medicinal organisms, which have gained high recognition from the government and industry, have become important options. The 13th Five Year Plan Outline for National Economic and Social Development clearly proposes to "expand the blue economic space". The marine economy is in a critical period of transformation from a scale speed oriented to a quality benefit oriented optimization. In this process, the formulation and introduction of multiple sea related policies, plans, and measures have comprehensively ensured and promoted the sustainable and healthy development of the marine economy.

In recent years, the technological innovation capability of the marine biopharmaceutical industry has improved, and the industrial development momentum is strong. With the gradual increase of national policy support and investment in the marine biopharmaceutical industry, various coastal areas are also actively promoting the development and growth of the marine biopharmaceutical industry by establishing guidance funds, building research and development bases, and organizing activities such as scientific and technological achievements transformation. The 2016 Statistical Bulletin of China's Marine Economy released by the State Oceanic Administration shows that, under a good development environment, the marine biological medicine industry has continued to grow rapidly, achieving an added value of 33.6 billion yuan in 2016, an increase of 13.2% over the previous year.

Considering that the company is located in Dongtou District, Wenzhou City, which is rich in marine resources, Yan Yiyi actively responds to the national policy of strengthening the development of marine resources, promoting the research, development and industrialization of marine biotechnology, and vigorously develops marine drugs with the advantages of raw materials. For example, the main component of Glucosamine hydrochloride capsules, the main product of Cheng Yi Pharmaceutical, is Glucosamine, which is prepared by hydrolysis of chitin. Chitin is commonly extracted from crab shells, shrimp shells, etc. Because of its light weight and large volume, it is not convenient for transportation, and its convenient location advantage has become the main API manufacturer of Glucosamine hydrochloride in China, forming certain advantages in the entire industrial chain. In addition, according to the goal of building Zhejiang into a strong marine province, Yan Yiyi included the development of marine drugs in the company's "13th Five Year Plan", actively studied and utilized local algae resources, and constantly enriched marine products.

As a senior figure who has been immersed in the pharmaceutical industry for many years, Yan Yiyi is well aware of the characteristics of multi technology integration, complex processes, and knowledge intensive in this field. The independent research and development ability and preparation technology level are the most important core competitiveness of the enterprise. Due to the heavy reliance on the R&D platform of enterprises and the technical level of researchers for the development of new drugs, which requires long-term accumulation, once the drug is successfully developed and industrialized, it will form a high technical barrier and have a monopoly advantage in the market for a certain period of time. Therefore, he attaches great importance to the investment in research and development, and has formulated a research and development strategy suitable for the enterprise's development. He has developed new products, formulations, and processes with independent intellectual property rights, continuously increasing investment and efforts in product research and development.

Due to the fact that the main body of pharmaceutical research and development in China is still research institutes and higher education institutions, the research and development technology capabilities of enterprises themselves are relatively insufficient. Strengthening cooperation between industry, academia, and research will undoubtedly help enhance the independent innovation capabilities of enterprises, thereby guiding and promoting them to become the main body of drug independent innovation. In addition to the cooperation with the Chinese Academy of Sciences Shanghai Institute of Materia Medica, Cheng Yi Pharmaceutical also signed technical cooperation agreements with Hangzhou Zhezhong Pharmaceutical Technology Co., Ltd., Beijing Minkang Baicao Pharmaceutical Technology Co., Ltd., Nanjing Dingying Pharmaceutical Technology Co., Ltd., Beijing Boquanjian Pharmaceutical Technology Co., Ltd. and other units to develop various new drugs and improve process technology.

Yan Yiyi revealed that with the advantage of landing on the main board of the Shanghai Stock Exchange, Cheng Yi Pharmaceutical will implement synchronous development of production and capital management, accelerate product upgrading and upgrading, achieve the transformation of raw materials to formulations, lead the transformation of products to marine medicine, biopharmaceuticals, traditional Chinese medicine and new formulations, and develop the health industry, implement marketing reforms, and strive to build the company's core competitiveness; By taking advantage of the opportunity of going public and through mergers and acquisitions, shareholding and other forms, we have planned, step-by-step, actively and steadily entered the capital market, extending the industrial chain, achieving leapfrog development of the company, and creating a new legend of marine medicine.

The spring afternoon sunshine penetrated through the lily window, and Yan Yiyi, wearing frameless glasses, was interviewed by reporters in the warm conference room. When it comes to the future development of Cheng Yi Pharmaceutical, fatigue gradually fades from his face, presenting his clear thoughts and increasingly bright eyes.

During the conversation, Yan Yiyi walked to the window of the conference room and looked down at the land outside the window where the preparation building was being built, with a confident smile on her face.

The True Story of Cheng Yi Pharmaceutical from Running a Pharmacy with Two Large Tanks to Landing on the Shanghai Stock Exchange.

Coming from the blue sea border, using self-improvement to create a sense of grandeur, and taking on responsibility as a style... Starting from two large tanks, Cheng Yi Pharmaceutical has gone through 50 years of baptism and now stands at a new starting point for listing. Looking back, the 3-hour interview seems to have not been fully completed, but Yan Yiyi's wish to "sincerely reach the world and benefit people's livelihoods" is gradually becoming a reality.